Digital technology continues to transform and disrupt industries and organizations across a variety of fields, requiring organizations to create and execute a sound digital transformation strategy. To remain competitive and provide a seamless experience for consumers in the retail/CPG space and patients in the life sciences space, business and IT leaders need to be involved in more than just IT. Organizations are realizing the power of holistically integrating consumer insights, data analytics, cloud technology, and mobile platforms into their digital strategies. On top of that, the increasing rise in artificial intelligence (AI), internet of things (IoT) and machine learning (ML) will completely change the way we think about consumer experiences and workforce collaboration. With digital transformation becoming table stakes for many organizations, CIOs need to take on responsibilities that stretch far beyond IT. According to Gartner, 87% of senior leaders have indicated that digital transformation is a top company priority. What’s more is that 64% of CIOs believe culture is a barrier to scaling digital transformation.
To avoid digital transformation pitfalls, it is crucial to focus on how a digital transformation can change your unique business in a massively positive way. We believe there are five foundational steps to consider when executing a digital transformation strategy for your organization:
1. Align on the Digital Vision with Key Stakeholders and Leadership
In order to move beyond planning to digital transformation execution, it is crucial to establish why your organization needs to change. To support an organizational change, you must first think about your key internal stakeholders across functions such as IT, Marketing, Product Development, and Operations. Establishing what role each leadership function plays in developing the digital strategy ties to the consumer experience. Positive impacts of digital are realized if key stakeholders have completely bought in on why change is needed and how the change can support both their function and organizational strategies. Once the leadership team is on board, the impact and enthusiasm can influence other teams to support the company vision. It is important to have ongoing conversations among leadership to agree on and dissect what the company digital vision is, what it means, and how it impacts the goals and tactics associated with a digital transformation.
2. Choose the Right Data Analytics Capabilities
The foundation of a digital-forward enterprise relies on iterative data collection and processing as well as a supporting analytics team. Letting data drive your strategic decisions will allow for a more informed digital strategy and transformation, as your organization will have the ability to monitor and track key metrics in real-time.
When identifying the right data analytics approach to take, consider the following:
- Will my organization own the data or utilize data from outside sources?
- Should my organization develop in-house capabilities or outsource to trusted partners?
- Does my organization have the standardized data to support a digital transformation?
- Is there a clear roadmap of all the necessary pieces of the puzzle (people, technology, processes, and financial needs) and how they will come together?
Dominos’ Vision Enables the Digitally-Focused Consumer and Employee through Data
The pizza delivery market was not typically considered digitally focused and data-driven until Dominos disrupted the industry. Dominos’ senior leadership determined what they were willing to change about their organization and operations to “constantly look for value in the undervalued parts of [their] customer experience.”
Dominos turned itself around by focusing on a digital strategy that brought their e-commerce capabilities in-house. By doing so, they gained capabilities to own their data and make informed decisions that changed the way they interacted with their consumers and employees. In late 2010, Dominos rolled out a pizza tracker that provides real-time updates and order tracking online for their customers. In their stores, employees also see several trackers that measure average time per order and weekly customer count rates, to name a few. Since the inception of their digital transformation, Dominos grew their mobile orders to 55%, and now digital orders make up a majority of their total sales.
Dominos focuses on ideating, building, and maintaining their digital capabilities in-house which allows them to remain agile in an age where consumer preferences rapidly change. They let their digital-forward vision influence strategic decisions including tracking operational metrics, hiring and training digitally-focused employees, and iterating new digital marketing platforms. With the combination of powerful, integrated technology along with diligent testing for new offerings, Dominos continues to pave the way in providing consumers with the data and digital channels they desire.
3. Assess the Level of Technology Adoption and User Readiness
Once the leadership team is on board, organizations must assess the level of technology adoption from each affected area of the business. One of the key reasons digital transformations fail is due to a lack of understanding around employee readiness for change when it comes to supporting digital technology. Consider conducting a gap analysis to understand who the change-enablers are and who will need deeper support as it relates to technology adoption. Change-enablers can act as champions of the organizational vision and encourage late adopters of digital to buy-in. Identifying change-enablers in each function to support the vision and supporting processes will lay the groundwork for your digital transformation strategy. The fundamental shift in day-to-day operations calls for a clear communication plan that is tailored to the various technology adoption levels in your organization. With an understanding of the gaps in knowledge and ease of adoption, your team will be able to mitigate risks ahead of time by building support mechanisms along the way.
Johnson & Johnson Transforms through Purpose-Driven, Agile Teams
J&J, a healthcare giant who has a longstanding set of structure and processes, found digital transformation success by starting small and focused on their goal of meeting consumer and patient needs. As CIO, Stuart McGuigan shared that the key to “iterating fast in the right direction” was through design thinking and agile teams. Rather than create a standard process that the entire organization followed, J&J had cross-functional teams who thoughtfully designed the way new applications and solutions were released.
For example, J&J tested agile when rolling out their new ERP systems across business units and regions. Rather than focusing on the entire organization at once, McGuigan identified teams that were equipped for the digital change. After successful implementation, cost savings, and efficiency gains, the team received business support to roll out ERP changes across the rest of the organization. Picking the right people and teams for digital change will help make the transition more seamless and beneficial for the entire organization.
4. Determine the Operational Impacts of a Digital Transformation
A transformation strategy should be supported by metrics and a business case to justify the time investment, budget, and resources required. The assessment should include perspectives from multiple stakeholders to understand existing processes and how they will transform with the enablement of digital. This not only prepares each group for the change, but it can uncover new opportunities such as added process improvement benefits or cross-functional collaboration efforts through new digital tools. Ultimately, the business case should show the KPIs impacted by digital transformation which aligns with the corporate vision and strategy. The three high level components of the business case should include customer impact, employee impact, and overall process improvement impact. Organizations who clearly define their operational benefits criteria can make more strategic decisions about how digital should impact operational processes and the customer experience.
IKEA’s Transformation Imperative: Stay Relevant Outside of the Warehouse
The Swedish furniture leader mastered operational logistics of designing, manufacturing, and distributing items across the globe at affordable prices. In the digital world, Ikea realized their traditional strategy of selling “build-it-yourself” furniture was not enough to meet consumer needs for convenience anytime, anywhere. The company has made strides towards digital transformation through the development of an Artificial Reality (AR) application called Ikea Place and an acquisition of TaskRabbit which connects consumers with furniture builders and movers. Ikea Place serves customers who want to “try out” furniture in their homes through AR technology. Their application provides 2,000 SKUs with dimensions down to the millimeter to help customers find the perfect furniture with a few clicks without making a trip to the warehouse. Beyond digital applications, Ikea is investing in Space10, a research accelerator that hosts designers, innovators, and engineers to develop the next generation of sustainable product innovations.
Ikea’s Digital Transformation Leader, Michael Valdsgaard, acknowledges the importance of both the due diligence process behind testing new digital offerings and understanding the business case before identifying the best path forward towards the one-stop-shop digital app experience. Ikea is carefully taking steps towards transforming their business model to be more digitally-focused in alignment with their vision and are assessing user adoption, determining the business impact, and supporting digital-forward design programs to foster the organization’s future talent.
5. Craft an Organizational Training Strategy to Operate and Leverage Newly Implemented Digital Technologies
Digital technology is meant to provide more efficiency and collaboration for people, not drive people away. Employees will benefit from a robust training program that not only helps them understand the digital technology but also helps them embrace digital technology in their day to day functions. Consider investing in your current talent through digital accelerator programs that train employees to apply a digital-focused mindset to their daily activities. To supplement formal training programs, it is crucial to provide tangible resources that educate all levels of an organization to properly use and gain value from supporting digital technologies and analytical tools. Organizations that create the tools and resources to support a digital-forward culture have greater chances of achieving a digital transformation. Leadership at all levels need to support and immerse digitally-focused teams to form a digital culture that sticks.
The Bottom Line for Digital Transformation Strategy
Before embarking on a digital transformation, consider laying a foundation based on your organization’s capabilities, key business processes, and the required enabling solutions needed (whether technology-driven, or other). Once your organization is fully bought-in to the core company vision and equipped with the right tools, they will be set up for success to build and enable digital capabilities.